What's Next for Azamara Club Cruises?

PHOTO: Azamara Club Cruises President and CEO Larry Pimental. (photo courtesy of Azamara Club Cruises)

TravelPulse had the opportunity to chat exclusively with Azamara Club Cruises President and CEO Larry Pimentel about the line’s exciting new developments, particularly the acquisition of a third ship and the brand’s future.

TravelPulse: Was buying another existing R-ship the plan all along or did an opportunity arise with the sale of the Adonia?

Larry Pimentel: We had fundamentally taken a kind of a different view about the expansion.

Our perspective was very strong about it [that] growth without profitability is not a starter kit for us. We wanted to validate the concept of destination immersion and everything it implies, and we have without a doubt succeeded at that. Guests love the product. Agents are getting great response. The ships are full and get waitlisted. So, the timing was really quite ideal.

As to growth itself, there’s essentially two tracks: One was a track that might be [an existing] ship or a complete line. Another track was new-builds, and, historically, Royal Caribbean has been a phenomenal new-build company with some of the most unique and innovative designs, I think, in the industry as a whole.

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But in our case, the board had a position which was completely supported by management which was: Let’s wait for the opportunity because it is going to arise. Now, we didn’t know how it might arise.

In this case, it arose, the opportunity was there, and for us, it was pretty fortunate because it’s identically the same class of ship—the former R-Class ship. The vessel that we have acquired was the original R Eight and it actually sat for its first couple of years because there was the unfortunate bankruptcy at Renaissance [Cruises].

So, the ship is not only the last to be built, but it sat for a long time, and it has as many known moves from one line to another line. But, in my view, it’s found its permanent home.

For us, while we are a small player, the third ship does represent 50 percent capacity growth. I don’t care who you are, what your size is. Anytime you’re growing by that amount, you’re growing at a rather substantive clip. For us, it’s very exciting, and it’s validation. It’s validation that the board has looked at our brand—our brand concept and our ability to return on invested capital—and said this is a brand worth putting money and effort into.

TP: Might you then be interested in purchasing the remaining one-off Princess Cruises R-ship—Pacific Princess—if it became available too?

LP: Anytime I can get an opportunity to look at—under the right metrics and the right financial construct—another R-class ship, I think the corporation would be open to that. Again, there are a lot of things that aren’t apparent to people when you have the same ship, but a lot of economies of scale come into place: spare parts, for example. You can share them.

Certainly, from a training standpoint of view, there are economies of scale and certainly even movement of crew between one class of ship and another. They are identical. They look the same. Because they are the same, it’s just easier to keep a quality standard. And so for me, this is a blessing, and, to your question, if that opportunity came up under the right construct, we would definitely look at it.”

TP: So, is a new-build still a possibility in the future?

LP: I think it’s like everything else at Royal Caribbean. If we can return the right return on invested capital for the shareholder, and I can be in the same arena as a well-run Royal or Celebrity [ship], then there’s no disadvantage to doing a new-build for this brand.

It’s not my first concentration. It’s assimilating 50 percent growth without any pre-sales because this thing is becoming available for sale at the end of about the second week in October, and the Pursuit will make her maiden voyage in August of 2018. That’s a very quick period of time. Normally when you have a new-build, you have years to sell into a ship, and in this case, it’s more months.

It’s really a function of how well we do with this third ship. That’s going to say a lot.

And I’m confident that the board is quite capable of doing the math, and if we come out in the right quadrant of the math, it would be interesting to see us with additional capacity and a new-build. Finally, I can look at my competitive set, and we don’t end up being the smallest when the new ship comes in, which is interesting. I think it just creates [a] brand new opportunity and playing field for us which is exciting.

TP: What will be happening between March and August 2018? Will this time be used exclusively for the refurb?

LP: Well, two things occur. One, the receipt of the vessel is in March. We’ll take the vessel in the Bahamas. We’ll go through statutory class inspection. That’s where they lift the ship out of the water, inspect the hull and also inspect what’s called the tail gear to ensure that that’s all operational. Once that’s the case—and I expect that to be fine—the official turnover of the ship is to us, and then we are going to head to Europe.

We’re in final negotiations between Cadiz and Marseilles—two different yards—and it will end up in the Mediterranean. Once it ends up there, we will go through a long refurbishment. The ship’s going to be refurbished from bow to aft significantly just as the Quest and the Journey were. It normally would not take that amount of time, except the shipyards have so much work, we have to wait for our turn to get in line.

TP: Might there be any new features coming onboard just for the Pursuit?

LP: I don’t think so at this point. We’ve got the plan. We’ve executed it last year. It’s very fresh. We’ve got the supplier network. We’re not looking at anything different. We’re looking at what we do on Quest and Journey being quite viable. These R-ships are a decade-and-a-half [old], but when you look at some of our newest suites, the average guest would say, ‘this stateroom looks brand new.’

I think today there’s so much that can be done in reconstructs and reimagined sort of facilities and revitalizations of ships, but I think we got a good formula. It fits with our brand. The guests are responding, and we’re not messing with that. So, you’re not likely to see anything different. You’re likely to see a lot of the same because our objective is to make the three sister-ships look as they are: three sister-ships.”

TP: What kind of new itineraries are you considering with a three-ship fleet? Might Alaska be in the mix now?

LP: Alaska will definitely be in the mix. You’ll see it in our product line in ’19. We have a whole series of product called ‘destination country intensives,’ and we sort of took a page out of the playbook of research where it shows clinically that people have bucket lists. So, you’re going to see us doing a lot of country intensives unlike many many cruise lines.

There’ll be all New Zealand, all Japan, all Croatia, all Greek Isle.

You’re likely to see things like South Africa come up, the Seychelles. You’re likely to see South America come up. You’re likely to see, as you’ve mentioned, Alaska, more of Asia. Again [a] third ship allows us to cover this earth which is three-quarters water. It allows us to go to many many more places and expand our product offering in more places than we could have ever before.

LP: Expect to see us come out with [a] nontraditional product which is pre and post of the ship. You’re going to see coming up sail and rail programs with various railroad companies: Orient Express, Rocky Mountaineer amongst many others.

And you’re going to see some unique programming because our entire notion and the very why we exist is to connect people to cultures. Trains are one of the classic ways of doing it and [go to] so many areas on earth as we began to explore it.

So, I’d say look for us to come out with products that start to look more and more like a tour operation rather than a cruise line. The ship happens to be the conduit to delivering uniqueness of culture.